Geothermal Tax Credits

Governments see that there are advantages in both the environmental and fiscal impacts of geothermal. As a result, there are many incentives and rebates being offered on the purchase of a geothermal heating and cooling system.

US Geothermal Tax Credits

An exciting new tax credit is now available for home and commercial building owners who install geothermal heating and cooling systems through the Energy Improvement and Extension Act of 2008 (H.R. 1424). H.R. 1424 offers a onetime tax credit of 30% of the total investment for homeowners who install residential ground loop or ground water geothermal heat pumps. A credit of 10% of the total investment is also available (no maximum) for a commercial system installation.

Make Sure You Qualify

To qualify, the systems must meet or exceed EnergyStar requirements and be installed after December 31, 2007. Check if your unit qualifies with our compliance certificate. While units installed in 2008 are subject to a $2,000 cap on the credit, units installed from 2009 through 2016 can take advantage of the full credit. Owners can file for the credit by completing the Renewable Energy Credits subsection on their tax return forms for 2008. For taxpayers that are subject to the Alternative Minimum Tax, they can claim the credit on their taxes for the following year. No proof of purchase will be required; however, in case of an audit, owners are encouraged to keep a detailed invoice of their purchase on file. The contractor who sold and installed the product should list the purchase as a "Geothermal Heat Pump" on the invoice and that it "Exceeds requirements of Energy Star program currently in effect".

The tax credit is available through December 31, 2016. Consult your local tax professional for advice on taking advantage of the tax credit, as this announcement is not intended as a recommendation or endorsement of any financial strategy.

Canadian Geothermal Tax Credits

Although most federal government incentives have ended, Canadian provinces, territories, and municipal entities are still offering incentives for installing geothermal systems. For a list of financial incentives by Province, visit: geo-exchange.ca – under the "Information Center" tab, click on the "Financial Support and Grants" link to see which incentives best fit your needs.

Even without government incentives, geothermal is still the way to go. GeoStar units are great for the environment and your wallet – tax credit or not, you'll still see great savings.